The surprising benefit of queues

The accepted wisdom is that long lines are bad for business. In fact, they can be very good for business, as long as they are not too long. Research shows that long lines help customers learn what’s worth waiting for, and help businesses attract uninformed customers.

Most consumers don’t realize, however, that they will sometimes seek out queues. The empty restaurant syndrome is one example. Perhaps you’ve looked through the glass window of a restaurant, seen mostly empty tables, and decided to move on to the next restaurant in your search for a meal. On the other hand, that restaurant over there with the people waiting seems popular. The underlying psychology of empty restaurant syndrome is simple: if so few people come to this restaurant, it must not be good. The dynamic is based on uninformed consumers (for example, you, first-time visitors to a city) taken their cues from informed consumers (the residents of the city who know which restaurants are good).

At the same time, there is no doubt that consumers also avoid long lines even in these situations: if there is a 45-minute wait for a table, diners may go elsewhere.

In short, waiting in a queue is a cost that is incurred by the consumer. However, because a queue also increases the perceived quality or value of a product, the value can be perceived as greater than the waiting cost (the quality of the restaurant is worth the wait). The result: a ‘herding effect’ where many consumers attract even more consumers.

Researchers Mirko Kremer and Laurens Debo investigated the impact of this herding effect through two controlled laboratory experiments. These experiments involving numerous rounds of simulated shopping expeditions in which the various factors , for instance, the value of the product, whether or not consumers were informed about price or value, the number of informed consumers, and the amount of wait times — where randomly manipulated. The experiments led to some interesting results:

The diagnostic value of a queue depends on the presence of informed consumers. In a tourist area, where the restaurants are patronized by tourists (in other words, uninformed consumers), the presence of a queue is not necessarily perceived as an indication of the quality of the restaurant.

A small number of informed consumers can have a great impact on uninformed consumers. One of the revelations of the experiments is that it does not always take large numbers of informed consumers to convince uninformed consumers of the value of the product.

Even high-quality products or services need a sufficient number of informed consumers. Not surprisingly, low-quality products or services do not benefit from more informed consumers. However, for the herding effect to take place, even high-quality products or services need a certain number of informed patrons or users to bring in uninformed consumers.